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Strong third quarter PC sales have led Gartner Inc. to increase its fourth quarter PC shipment projections to 47.2 million units worldwide, it said Friday.

Gartner now predicts that worldwide PC shipments will reach 164.3 million for the whole of 2003, up 10.9 per cent on 2002, it said.

In September, Gartner predicted that 2003 shipments would be 8.3 per cent higher than the previous year, but has changed that estimate due to strong third quarter results, led by the home and small office markets, it said.

However, the research company said it remains cautious in its overall outlook. Demand in the large corporate sector is still lacklustre, except in Europe, where the exchange rate between the Euro and the U.S. dollar has been driving growth, Gartner said.

The U.S. home market, possibly driven by tax rebates and lower tax withholdings, may also not continue to grow, Gartner said.

New models introduced before a new Japanese PC recycling law, which came into play at the start of October, could have been responsible for part of the strong third quarter growth in that region, therefore, growth may now drop back, the company said.

Also, inventory levels in the U.S. retail market are noticeably higher than last year, Gartner said.